Minding Your Business During Your Divorce

Many American couples start a business together. In fact, an estimated 3 million small businesses in the U.S. in 2000 were couple-owned, and that number has likely grown over the last nearly two decades. When a couple have become business partners and dissolve their marriage, the process can be disruptive – and even detrimental – to the business.

It’s untrue that getting a divorce automatically means you and your soon-to-be-ex must liquidate the business you two share. There are, however, multiple complexities to overcome to find a new routine for keeping the company afloat.

A long list of assets called marital property is often divided during a divorce, and the company you and your spouse own is considered one of those assets. Determining how the business will be divided depends on several factors, including:

Financial agreements on loans and loan refinancing

How the business was funded

Where the profits went

Whether you started the business before or after you got married

Do You Want to Close Your Business or Keep It?

Emotions can run high when a divorcing couple is deciding whether to work out a plan to keep the business going and equitably divide it or to liquidate the company assets. A major factor to consider is the actual economic value of the business and your share. The valuation of a business is a complex procedure that requires an expert opinion. To ensure clients make the most informed decision possible, Petrelli Previtera Schimmel consults with certified public accountants (CPAs). When you can quantify the value of the business, it may become clear whether it makes more sense to keep it or get rid of it.

If neither spouse wants to keep the business, selling the company and dividing the profits may be a viable option.

Keeping the Business: Divide or Trade?

If you and your spouse decide to keep the business running (or can’t agree to close it), the court will determine the percentage of the company’s value that should fairly go to each spouse. The size of your share and your spouse’s share depend on the relative contributions each of you made to the business.

For example, you may be awarded a much larger share of the company if you can prove your spouse had little to do with the running or profitability of the company. Alternatively, you could agree to let one spouse keep the entire share of the business and “trade” for another asset of equal value to your share.

Getting Help

If you own a business with your spouse and the two of you are talking about divorce, there’s more on the line than your marriage. Making the right decision regarding your company’s future can affect your both in a big way financially.

The legal team at Petrelli Previtera Schimmel has helped numerous couples decide what is best for their business as they dissolve their marriage. Feel free to contact our firm for assistance as you consider the implications of your divorce not only on your business, but also on your family, property and finances.

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Thomas Petrelli, Jr.

Thomas J. Petrelli, Jr. is a family lawyer who focuses his practice on cases of divorce and related matters, support, custody, and parental rights. He was selected for inclusion to Pennsylvania Super Lawyers® in 2010-2013 and 2015-2017.

Melinda M. Previtera

Building great relationships with clients is the cornerstone to Melinda’s successful practice as a family law attorney. Her passion and experience allows her to tackle the most complicated cases with confidence and knowledge to obtain the best outcomes for her clients.

Diana C. Schimmel

Diana’s extensive experience as a family law attorney has given her the intimate knowledge necessary to achieve the best outcomes for her clients and has allowed her to successfully represent those navigating a wide range of family law issues.

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